The IRS requires you to take money out of your retirement accounts when you turn 73. These are called required minimum distributions (RMDs). If you don’t take out the right amount, you could face big penalties.
Here are three crucial RMD rules to know before the end of 2024:
1. You have extra time to take your first RMD. Typically, RMDs start the year you turn 73.
But for your first one, you can wait until April 1 of the following year. So if you were born in 1951, your first RMD is due by April 1, 2025. Just remember, you’ll have to take two RMDs in 2025 if you wait.
2. The rules for inherited IRAs have changed. If you inherited an IRA from someone who died in 2020 or later, you now have ten years to empty the account.
Understanding RMD timing and penalties
There are some exceptions, like for spouses and young children. Also, the IRS says you don’t have to take RMDs from an inherited IRA in 2024.
But starting in 2025, you will if the original owner has already started taking them. 3. You can use qualified charitable distributions (QCDs) to lower your RMD.
With a QCD, you can send up to $100,000 directly from your IRA to a charity. This counts toward your RMD but isn’t taxed as income. You have to be at least 70 1/2 to do a QCD.
RMDs can be confusing, and the rules keep changing. But it’s essential to get them right to avoid penalties. If you have questions, it’s a good idea to talk to a financial advisor or tax professional.
They can help make sure you’re on track with your RMDs and overall retirement plan.
Rashan is a seasoned technology journalist and visionary leader serving as the Editor-in-Chief of DevX.com, a leading online publication focused on software development, programming languages, and emerging technologies. With his deep expertise in the tech industry and her passion for empowering developers, Rashan has transformed DevX.com into a vibrant hub of knowledge and innovation. Reach out to Rashan at [email protected]
